OECD Cuts Global Growth Forecast as Greek Default Weighs

The world's growth will only grow by 3.1% this year, down from expectations of 3.7%, according to the OECD's chief economist.

NEW YORK (TheStreet) -- Global growth is slowing, according to the Organization for Economic Co-operation and Development. The OECD said Wednesday it cut its growth forecast to 3.1% from 3.7% for this year. Last year, the economy expanded by 3.3%.

According to the OECD, factors keeping investors cautious include a possible Greek default and lack of investment from large companies. Weak demand is also inhibiting global employment and wage increases, according to the report.

The growth forecast revision came following the first-quarter contraction in the U.S. economy. Slowing growth in China was another factor.

Though economic expansion may be flagging, OECD Chief Economist Catherine Mann sited positive global trends including monetary accommodation, low oil prices and less fiscal drag. The Paris-based organization expects the global economy will reach pre-crisis levels of growth in the late stages of 2016.

Mann said the OECD would grade the global economy as B-, "barely passing." She said the "main reason for the weakness in investment is the weak recovery itself and doubts over the prospects for stronger growth."

Mann emphasized that "failure to reach a satisfactory agreement between Greece and its official creditors would intensify perceptions of re-denomination risk and uncertainty." She said the eurozone is seeing improved growth levels, with GDP predicted to grow 1.4% this year from 0.9% in 2014. The OECD is currently predicting that the U.S. economy will expand by around 2% this year, down from 2.4% last year.